Avalanche Summit is a conference for developers, researchers, and makers building on Avalanche at Barcalona, Spain from the 22 to 25 March 2022.
The segment on the trends in crypto investing was panelled by Benton Yaun, the creative lead of Coindesk, as the moderator, Austin Barack, partner of Coinfund, Lydia Chiu, VP of business development in AVA Labs, Bryan Myint, Managing Director of Republic and angel investor, Wangarian.
There are multitudes of evolutions happening within the crypto space namely narratives in DeFi, the metaverse, and gaming, in this article we delve deeper into areas for potential investments and where hyper growth will come from.
Adoption of subnets in Avalanche
One area of potential investment is in projects that have a cross-chain nature building on Avalanche. Projects which can fill in missing primitives and gaps will drive continual growth within the ecosystem. The adoption of subnets will also shed light on its use cases from gaming to even institutional DeFi.
One way investors can participate in the upside of subnets is through initial subnet offerings. This would occur when projects build on Avalanche’s subnet and issues its very own token. These tokens would power the subnet which may be used for the gas or the unit of accounting for the subnet.
Avalanche also has a very unique go-to-market strategy. Their C chain (EVM) provides a base layer for specific application to deploy on before the introduction of subnets which comes as a scaling solution for L1s and L2s.
The consensus model of Avalanche also differentiates itself from its peers in the department of finality. Instead of the Nakamoto consensus model where it is probabilistic over a certain number of confirmation, having a transaction to be final and irreversible in less than a second would enable much more use cases.
Productive NFT assets
Even with the NFT wave that happened in 2021, productive NFT assets have only just scratched the surface within the crypto space.
Since DeFi summer last year, it has been stale over the last six months with little new innovation in the space. However, the merge between these major components in crypto could be something worth exploring in the future, just imagine DeFi utility in the NFT space.
NFTs has been such an unstoppable force within the crypto space with so much of value generated, but the power of DeFi has not been fully connected to that.
Imagine collateralized loaning/lending backed by the value of NFTs or just being able to have more liquidity across NFTs projects.
Even the infrastructure on cross chain platform to facilitate all of that has yet to exist. Interoperability will be the big play of 2022.
Interoperable future with L1s
There is strong reason to believe that the future will consist of a multi-chain world. Projects who find their product-market fit will stay along with the maturity of interoperability through bridges which poses risks but strengthen over time.
There might not even be 10-20 different L1s in the future competing for dominant market share but instead, one with more of a oligopolistic market structure of 3-4 L1s competing in the space.
Interoperability unlocks new innovation by bridging different ecosystems together and make complex transactions simple.
Gone will be the days of bridging funds from Terra to Avalanche to trade into a specific token to deposit into a borrow/lend protocol. Interoperability encompasses every step, from the bridging to the swaps which will all be done in 1 transaction.
Ideally, interoperability should reach the level where end users do not need to know/care on which blockchain they are on and brings a fully seamless experience.
However, the components of blockchains within that interoperable process will still drive value just by being utilized.
The best play could be a robust infrastructure for interoperability with a fluid user experience, with infrastructure being the key focus for scalability in order to achieve global adoption.
What will instigate the next bull run?
1. Innovative projects
Innovative projects are key in kickstarting the next bull run. There are many new innovations in gaming, with new designs and the integration of NFTs.
Gaming gives NFTs a new place to reside in with utility as well as its potential to unlock value beyond the game itself. Innovations in giving utility and value to things which already exist might just be a game changer.
2. Decorrelation of crypto
Right now crypto has an invisible ceiling to it due to the macroeconomic factors affecting the market. Being the risk asset along the furthest spectrum of risk assets, it is generally traded as a proxy for other markets when they are closed during the nights/weekend.
Anything that is happening on the global economy is somewhat reflected in the price action of Bitcoin before anything else.
However, what we are seeing now in the past couple of weeks is how crypto is starting to decorrelate with other major asset class and starting to behave accordingly to its own rhythm again.
From receiving higher yields in crypto compared to traditional bonds to the transition of ESG (Environmental, Social, and Governance) outlook from proof of work to proof of stake might also contribute might also draw newer capital inflow into the space.
The decorrelation form existing macro factors with the merge of broader asset allocators might instigate new flow of capital into the crypto space and resulting in the new bull run.
GameFi can drive creativity, innovation and excitement in the space potentially instigating the new bull run.
However, we have yet to scratch the surface in combining AAA rated web2 games and introduce play to earn mechanics in a sustainable and novel way and till that has matured, we could potentially see the next 50-100x within the space.
Nonetheless, time is of the essence. It took cyberpunk 7-8 years in developing a AAA game but fell short upon its release.
It will take time for GameFi to mature and develop which may only kickstart the bull run only after 3 to 5 years.
4. User experience and design
Currently crypto has a relatively high and extensive learning curve to onboard. Think of trying to create a metamask wallet which comes with relatively technical aspects of approving 3 transactions, verifying your seed phrase to why you need to sign a transaction and many more.
That experience is just the basics, you then move on to learn about learning about staking and liquidity pools which can be highly technical for common folks. When the user experience issue can be solved, it will see an influx of people coming into web3 and trigger bull run.
The game features an expansive overworld of several distinct areas inspired by Zelda: Breath of the Wild, where players can quest, clear dungeons, and build cities on their own digital properties. NFTs of weapons, armors, heroes, skins, resources, and even animal companions can be used or traded by gamers on a decentralized player-driven economy.
Crabada is an exciting play-and-earn idle game based in a world filled with fierce fighting Hermit-Crabs called Crabada (the NFTs). Players will rediscover the prosperous ancient kingdom of Crabada and earn rewards through activities such as mining, looting, breeding, battling, exploring, crafting, and more.
3. On-chain options
Options are typically twice the size of future markets and currently just a fraction of the perps in crypto. Could be a space where VC firms and institutions explore and utilize in the crypto space.
It is always important to protect yourself amidst macro-economic conditions.
Avalanche might be valued in the trillions. You still might be early.
Subnets are mind-blowing. EVM compatible. Compare Avalanche market cap with Ethereum’s/Bitcoins.
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
Featured Image Credit: Chain Debrief